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Andy Smith writes "One professional photographer in Somerset, UK, thought he was drumming up lots of extra business with a special deal on the Groupon group-buying site. Sadly he has ended up committing himself to nearly a year of unpaid work, plus he has to give out over 3,300 free prints." This analysis seems to be based only on the author's observations (rather than the photographer's experience), but the numbers are interesting. It can't work against everyone, though, or I bet there'd be fewer repeat advertisers on the daily-coupon sites.

TFA doesn't take into account the chance to up sell his products once in the house. These people could be paying £30 to let a salesman into his house to try and fleece them for all he can. It woulnd't be the first time I've heard of this.

I wondered about that. The usual technique there is to only offer one modestly-sized print, and to then sell premium prints. In this case the deal includes 11 prints, but there's still a chance to try to sell premium products such as the 30" x 12" framed family montage I have over my mantlepiece, which cost £300 (about $500). That was at the studio, wasn't a hard-sell and eight years down the line we are still glad we made the purchase. Given that this photographer is going into the homes, the chance

Seriously, if the photographer does a better than mediocre job at best, he'll still manage to sell 100 quid worth of additional product once he returns to show off what's he's done. What's best is, he doesn't even need to have his own studio to do this and by using a proper photo printer (dye submersion for example), he can even do the prints at a good profit to himself.This guy lists that he managed to get into 301 houses... let's say that's over a year. Even if he only averages 100 quid a house, he'd mana

Yes and that's been true for decades. I remember my folks going to a couple of those stupid timeshare talks just so they could get a free cheap gift. They knew they weren't getting the big prize(if anyone ever does, which I doubt) but they'd take the crap prize.

And my mom still collects all of the dead tree coupons and does triple coupons with rebates for brands she'd never normally buy but can get for near free. Once the coupons are gone, back to the regular brands and stores.

My wife and I have gone to places that do the Groupon once every few months. Since we've gotten it every time (because the restaurant in question is very good) we asked one of them about it. Remember that restaurants are charged a base amount for food. Then they mark it up based on the work they have to do. This place said people coming in with a Groupon worth $40 often spend $60-100. So yes, they are taking a hit of around $30 from their listed price, but when things are marked up more than 50%, it doesn't

Even if that's the case (and I have no idea if it is, but I'd bet they'd find a way around it), it's basically an interest-free loan to groupon for two years which is still a pretty good deal for them.

Most states do not require gift cards to become unclaimed property. If you don't use them, the merchants will charge service fees to the card until the balance is zero, or until the card expires, at which point they are free to pocket the money. (Only a few states require the business to "escheat" the "abandoned" funds[1], for that to happen, the state must not permit fees, and must either forbid expiration, or specify that the money be processed as unclaimed funds upon expiration.)

That's rather difficult, considering that Groupon expects you to slash your price by at least 50%, and then they typically take 50% of the remainder as their commission.

So unless you can turn a profit while charging <=25% of your normal rates/prices, it's best to think of Groupon as an advertising expense—not a business method.

That's why Groupon, at least in my city, has been steadily going down hill. It use to have offers from worthwhile companies. Now it's limited to high margin service sector companies. Groupon is slowly killing itself. I don't even bother checking anymore, and here's why:

ISTM Groupon are being greedy, taking a 50% skim off the top (i.e. without sharing the credit card commission). So if you were to make a profit on a groupon deal. you'd have to be charging over 100% of your costs to do so. With the recession / crisis (different countries, different words - same squeeze on the wallet), there can't be many businesses that haven't pared their margins and can't therefore afford to take
As for follow on business? I doubt many bargain hunters would come back. if they're too tigh

Groupon is a good idea, but you have to make a profit for each sale including the coupon. If you don't do that then you shouldn't be doing the promotion. Lost leaders help no one.

You apparently don't own a retail business. Advertising is very expensive and sometimes it's necessary to run a business at a loss in order to get people to notice your business and give it a try. It does help, and can lead to a very profitable business in the long run. Loss leaders can pay off big if done right.

This just seems like basic business sense: don't enter into unprofitable agreements. The photographer put a limit on the number of these offers. It seems like a reasonable guess that he was better able to do the arithmetic than the article author, who is purely speculating that this came out to a net loss.

No, the author is dead on. Your "reasonable guess" that the photographer was able to do arithmetic is based on the false assumption that the photographer is not an idiot. The thing is, the vast majority of "professional photographers" are idiots, who have no education or experience in either photography or business. I've been a full-time professional photographer for 10 years, and the bulk of the competition is just mind-bogglingly dumb. A photographer in my local market offered a similar groupon and I did the same calculations as the author of this article. The girl wound up selling enough to work for 5 months, 40 hours a week for an $1800 GROSS profit. So that's before paying for equipment, insurance, phones, computers, etc.

The other problem with groupons for luxury services like photography is the kind of clientele they attract. If you're going to offer portrait photography, it has to be done with a high level of quality and service, and therefore a high price tag. You simply cannot compete on price doing button-pusher work because then you're competing with the loss leaders at the Sears portrait studio. So, you have to make something artistic and unique that someone is willing to pay a premium price for or else you're not going to make any money. Groupon customers, however, are by nature deal-seekers. They're people who shop based on price, and are therefore unlikely to come back and pay premium prices for luxury services like portrait photography.

Groupon is just a bad idea for photographers all the way around. You lose a lot of time and money and only really gain exposure to people who make for poor clients.

Yeah, I'd imagine that insurance is pretty expensive in a high-risk industry like photography. And the computer is only a monthly cost if you're renting it from Aarons; but if you were doing that, they'd already be taking the pictures for you.;)

Knock off 20% of my normal service call price, discount refrigerant by 75% and make money.

Keeping in mind R-22 costs around 180USD for 30 pounds and every company in town sells it for at least 50 bucks if not 65 bucks a pound.

Not to mention parts are usually marked up by massive amounts. One local company was selling a simple fan relay that cots $1.23 or so off sale and less than $1.00 when on sale, for $119.00, not to mention the $85 bucks an hour labor charge, a $45 d

Well for me, equipment insurance is about $1000/year, liability insurance is about $350/year, and then there's auto insurance on the company vehicle.

It was just an example of one of the many minor expenses that come with running any small business. People gloss over it, but it's death by a thousand cuts. The #1 mistake anyone makes with any business is confusing gross and net. And people, owners and customers, do it ALL THE TIME. Of course from a different point of view. Prospective business owners

According to this survey [screenwerk.com], 42% of Groupon SMBs would not repeat. That's quite a lot, and it's from this and cases like this story that I suspect that the Groupon-like business model will not last too long, once the fad has died.

According to this survey [screenwerk.com], 42% of Groupon SMBs would not repeat. That's quite a lot, and it's from this and cases like this story that I suspect that the Groupon-like business model will not last too long, once the fad has died.

I'd give you mod points if I had any. The article mentions one of the benefits is "getting good exposure". But it works both ways. If you have to rush to get all 300 done and do a bad job, you've just delivered a product for a lower profit margin and provided yourself with bad publicity - worst of all worlds.

According to this survey [screenwerk.com], 42% of Groupon SMBs would not repeat. That's quite a lot, and it's from this and cases like this story that I suspect that the Groupon-like business model will not last too long, once the fad has died.

I'd give you mod points if I had any. The article mentions one of the benefits is "getting good exposure". But it works both ways. If you have to rush to get all 300 done and do a bad job, you've just delivered a product for a lower profit margin and provided yourself with bad publicity - worst of all worlds.

I don't understand why anybody would offer such a labor-intensive service via Groupon. Groupon is great for coupons at restaurants and stores and getting exposure for your little hole-in-the-wall store that has cool things but nobody seems to have heard of. It also seems to be great for dentists given the number of ads I get by email every week for dental services. But photography? First of all, that's not really something that's usually based upon a set price. That's something that should be a negotiated price on a per-contract basis. A Groupon would be just fine for, say, $25 for $100 Off Services From Hasselhoff Photography, but $29 for a $200-value remote photoshoot in the location of your choice? That's just ridiculous.

He made a really stupid decision and now he has to eat it. That's all part of running a business. It's not Groupon's fault. But I also don't see anywhere that the photographer himself is complaining... The article doesn't mention any statement by the photographer or have any links to his website. This just seems to be some retarded commentary from the sidelines by somebody who thinks he knows what he's talking about when he says "look what happened to this guy because of Groupon omfg". This whole thing is leaking stupid out of every pore.

Plus mass, untargeted exposure isn't everything. Marketshare at the cost of margins has been tried and failed in the past often enough. People protest when you raise prices because they are used to the old deal and most services/products are commodities anyway, to be had elsewhere.

This kind of business model has existed in only slightly different forms for quite a while. In the 70s, there were large coupon books that were heavily advertised and contained one coupon from each of many businesses.

They gave huge discounts, but you only got one coupon for the company per book. The book was sold for a fee that wasn't so small that you could afford to buy the book and throw away all the coupons but the one you wanted. But if you used many of the coupo

If the Groupon model fails, I wouldn't be surprised if it's down to their own greed. Their running costs are basically a few servers and little else, yet they're taking a full 50% of every sale - combine that with a 50%+ discount on the sticker price, and the seller is only taking home a quarter of their normal sale price. Even with relatively low redemption rates it's hard to turn a profit on that, so a listing on Groupon becomes a one-off advertising expense.

As you say, running costs aren't particularly high, and given how they've spread, long since recouped. As long as it keeps going, they're making a killing at the current rates. If it starts to decline, sell in time to some schmart corporation or keep going until profit becomes too small, then close shop and start a new sca- err, venture.

There are 27 million small businesses in the US. If groupon can make $14 * 300 = $4200 per business the potential market is $113 billion. (And that ignores selling to the 58% that said they'd do it again).

To be fair, you could also go the other direction. For example, you say, "1. They surveyed 360 businesses but only 150 responded. Obviously the unsatisfied ones would be biased towards responding. This could cut the "real" would -not-repeat-rate by as much as half." Who says the unsatisfied ones would be biased towards reporting? Maybe the unsatisfied ones are apathetic towards responding, and the satisfied ones are energized to respond. You say that the "This could cut the "real" would -not-repeat-rate

Maybe in your area. When Groupon finally accepted a zipcode within 50 miles of me, the first few days were filled with rather interesting things. Winery tours, ski lift tickets. Now, every time I look it is skin peels, and laser hair or fat removal from some office that either just opened or no one trusts.

Groupon is a great idea, but if they keep expanding to new areas without considering if the area can support those costs, they lose customer confidence. And that is all they have to actually sell.

I can't tell who's fail it is. Was it Groupon for not allowing a finite amount of offers to be sold (or notifying the photographer to set a finite amount), or was it the photographer for not gauging his limits as to how many at-cost shoots he can feasibly, and thus setting his "sales limit" too high. TFA shows he sold 301, but was that His limit, or Theirs? I figure it was set by the photographer, and therefore he screwed up by pre-agreeing to do more than he was able.

TFA doesn't provide any evidence of a failure - read TFA carefully - its someone who has seen the ad on Groupon presenting their own calculations as to its viability (which may be exaggerated e.g. - £5 each for photo frames in quantities of 300+? Has the guy never heard of China? Even retail, one-off at IKEA [ikea.com] you can get them for under £3.)

As several other posters point out, he doesn't include the value of unredeemed coupons.

Nor does he take into account how much extra money the photographer co

My OH uses Groupon for bagging offers, but I'm more the sceptic who looks at these and says "too good to be true". Much like you say, sold extras.

I see what you mean now about the article being a poor estimate at best. When I wrote that I misinterpreted it as a report via the photographer who was claiming he was at a loss and thus someone else drummed up an article around it. I now see what the article is, thanks.

Or it's nobody's fail and the photographer up-sold 300 new clients on $200 worth of prints.

We're in a similar industry and part of our pricing model assumes that we're not working 50% of the time or more. I know photographers who price their services for even higher rates of underutilization.

Since about half of groupons go unused he only has to do 150. If they do have 50% down time then that's one a day that would have been unpaid time anyway. If they could on average make $50 on additional prints late

One fail: I think the original price of £200 is too low. Based on three hours of work and expenses, it should be at least £300.

Which would suggest that each punter can be persuaded to buy, on average, enough extras (prints, frames, albums, makeovers) to make up that £100... and the Groupon customers already think they've saved £170, so why not blow it on a big print, normal price £300, at a special one time only, gone as soon as I walk out the door price of £249.95...

It does't say a professional photographer does it? It just says photoshoot. They could be keeping the interns busy. But a decent chunk of these things never go claimed, and I am sure there are things that they can upsell the groupon buyers on.

But the cost of the prints is still higher than the take from each sale. It doesn't matter whether the business owner is doing the work or unpaid interns are, the hard costs are higher than the receipt. You can't exactly lose money on every sale but make it up in volume;)

That would be a shady trick that no one would put up with. They're getting a disc of images with the session, so they would just take their digital files and make their own prints. Groupon would also get a slew of complaints and wind up taking the money back out of the guy's account. You can't be a restaurant and offer a groupon deal for a $5 meal or something and then serve dog food and say "Ohhhhh you wanted human food? that'll be $40!" and expect that somebody is going to pay up because you were so c

These sorts of photoshoots are frequently given away for free. Basically, the photshoot is £50, and each print is some huge amount of money. They "give away" the shoot for free, then get you to buy a few prints.

So an idiot offered a deal where he lost money. It's not like Groupon set up the deal, decided on the services offered or set the price and number of packages. That was all the photographer's choice, it's not Groupon's job to decide any of that or do an analysis of the deal. Their job is to sell the coupons.

Stores didn't tell Gillette to charge for the razor, they just sold the blades. It's not the store's job to determine if the manufacturer makes money. Groupon is no different.

Groupon is not, however, selling deals that puts other businesses out of business. Groupon does not make up the deals, the individual businesses do. You can kill your own business by offering something for nothing, but just because a limited number of better deal coupons exist does not run others out out of business.

I'm not sure I know anyone who would blame gift cards if they had one for a business that went bankrupt. Most rational people would blame the business, not the concept of gift cards. Same thi

I've seen nearly-identical "deals" for photography packages on Groupon before. To be a successful commercial photographer, you need 1) equipment 2) a measure of skill and talent and 3) enough business smarts to make enough money for your time.

The move to digital has significantly lowered requirement #1, equipment. Until an photographer starts building a portfolio and eliciting feedback from others (preferably experienced photographers), they won't have a clue as to requirement #2, their skill level. That la

The cost difference is the dark room equipment. Camera bodies cost about the same, a little cheaper if you consider them the same as 35mm film and never plan to enlarge a shot much above 8x10. Optics, lighting, all of that equipment is pretty much the same price as it's always been, now you just have built in wireless flash controls instead of lugging around some wires.

Now, a dark room, you are going to have film developing and print developing. For film, you might go cheap with a couple of canisters and s

It depends. the stupid pro that has to have "the best" of everything? far too much, at least $40,000 in hardware for a single portrait shoot.the smart Pro photographer?

Instead of a Canon 1DS you use a Canon T2i. Saved $1500.00 there.Instead of L series glass you use decen non L series prime lenses. Save from $1500 - $30,000 depending on lens.Instead of high end pro backdrops, buy the china crap for $250.00.. Saved $2500.00 there, just buy new backdrops every 1-2 years.Instead of high end Lighting, ag

The way to look at Groupon, or any other kind of coupon/discount deal, is as a form of promotion/advertising.

If you take out a magazine or billboard ad, you're paying up-front for something that may or may not generate new business.

If you set up a Groupon promo, the only cost is to provide your service or product at next-to-no-profit. This is a very small price to pay and you're only paying it for actual clients. If a client winds up not using it within the allowed time frame, you end up pocketing your ha

It happens often enough.. A company offers groupons then goes out of business. Customers complain to groupon and get refunds, no questions asked. I think everyone, including Groupon, is really fine with it and no one ends up going to court or doing slave labor.

It happens often enough.. A company offers groupons then goes out of business. Customers complain to groupon and get refunds, no questions asked.

Except the person who quite likely put a lot of money into going into business, and possibly even went into personal debt, only to be driven out of business at a huge personal financial loss by unwise use of Groupon.

I'm afraid my humble blog has again yielded to the footfall of a thousand stampeding slashdotters. One of these days I really should move to a dedicated server, but for now here is the text of the article...

Beware of the Groupon piranhas eating you alive!

This is a cautionary tale for anyone who may think of offering a deal through Groupon, the group-buying site that promises great deals for customers and great exposure for businesses.

The idea is that, as a business, you offer a special deal on the Groupon web site. For example a restaurant may offer a meal-for-two worth £200 for the bargain price of £80. Groupon takes a 50% cut so the restaurant gets £40 which should be enough to cover the actual cost of the food, plus they've had some good exposure and, hopefully, the few hundred people who bought the deal will go back another day and pay full price. Maybe they'll even become regular customers.

But look at what happened to one independent photographer in Somerset:

He offered a £200 portrait package for £29, which was bought by 301 people.

Let's break that down...

Firstly the photographer will only get £14.50 because Groupon takes half. And if the client pays by credit card, which they probably will, then the photographer has to pay the credit card fee, so he's only getting around £12.

Each shoot lasts one hour, but it can be anywhere the client chooses within 15 miles of Bristol city centre. So let's suppose the total time for travel is half an hour each way, plus 20 minutes to set-up lighting and background and 10 minutes to tear it all down at the end. Already he's up to 2.5 hours so he's charging £4.80 per hour, not taking fuel costs in to account.

"Every photo taken will be put on CD or DVD in high resolution" -- this is fairly trivial, let's say 15 minutes work and £1 for the disc and case. He's now getting the equivalent of £4 per hour.

But the deal gets better! "20 of the images will be professionally edited and air brushed" -- now I assume this is nothing more than a bit of spot removal and some minor tweaks, because there's no way you can do a full retouching job as part of a £29 package, and there's certainly no way you can do 20 of them. So we'll estimate a super-speedy 5 minutes per picture and imagine that he somehow gets the whole lot done in 2 hours. He's now on £2.32 per hour.

Anything else included? Yes! You get "one 12x10 framed print, two 10x8 prints, two 8x6 prints, two 5x4 prints, two 4x3 prints, and two 3x2 prints" -- a total of 11 prints, with the largest one framed. I'd estimate the absolute rock-bottom price for producing those prints will be £8 plus another £5 for the frame if he's buying in bulk. That's £13. That's more than he's getting from each client, and he's got 301 clients to make his way through.

Even if this photographer is doing each job to a bare minimum standard, he has committed himself to nearly a year's work for no money. If that doesn't sound like good business sense to you then be very careful if you decide to offer a deal through Groupon or any similar site. What may at first seem like success could very easily put you out of business.

I think his website is pretty hopeless, he has adopted a name which is already well used and he has an email link rather than a proper form submission linked to a database. Also, what's with the "Somerset"? There's no address on the website, but he quotes a 15 mile radius of Bristol - which is in Bristol, thank you very much. (I live on the Somerset/Wilts border.)

I can't help but think that what he really needs is some good business advice, though as he may possibly now end up having to go into hiding from

This looks like a loss-leader, and death-by-coupon isn't anything new. In a big city it's pretty easy to spot the restaurants in deep trouble; they start with coupon specials, which turn into permanent coupons. Then they start closing on Mondays and Tuesdays. Similarly, it's easy to spot a professional photographer that can't get steady work. Groupon isn't doing anything that hasn't been done a thousand times before, and there will be no shortage of photographers and restauranteurs with extremely poor busin

He underpriced his offer, but it doesn't have to be a disaster. It's a workflow problem. The photographer gets to schedule the shoots, so he has to get them organized into blocks in the same area. Many people won't have a location in mind, and he can get them to go either to his studio or to one of several pre-selected scenic locations. Once set up in a location, customers can be run through in an hour each. Customers who insist on a specific location have to wait longer for a time slot to open up.

The post-processing work is also a workflow problem. For most shots, a minute or two in Photoshop is enough. Those can be farmed out to an intern, or even some site like GetAFreelancer. The paper printing, DVD making, and framing gets done in bulk, with bids from various companies.

If half the people who bought the coupon actually use the service, and the photographer is organized about it, it's probably about six weeks of work.

The photographer can up-sell. Want hair, makeup,or costuming? Available for an extra charge. Some of the business will be wedding-related, and that's an opportunity to sell a whole wedding package.

Honestly Whoring yourself at gutter prices? the man deserves it. what he promised he was completely insane to offer at that rate.

Oh and those thinking that he will make money on stock photo sites... No he wont. you can't sell them to a stock photo site without a full model release from the person in the photo, Owning copyright does not mean crap if you dont have a release from the model that says " you can do anything you want with these images, yes even using my image to advertise massive herpes outbr

Even if the guy only gets ~12 pounds out of the deal, as the article suggests, he can easily make that up by buying materials in bulk and following the letter of the deal. 12 pounds equates to ~$20 usd.

1) You can bet the framed photo in the deal is for a cardboard photo frame...a box of 350 of these cardboard frames can be bought for $250, or the equivalent of $0.71 per frame. These are 8x10 (I couldn't find 12x10 frames), so lets add some more to that and make it $1 each for the cardboard frames.

Indeed, this has been a known problem for a while. Groupon typically recommends that businesses set some sort of a limit on the number of coupons available, at least during the first try to see what the response is and to verify that you can handle the extra business. While I do have sympathy for business owners that fail to heed the recommendation, it's hardly Groupon's fault if you don't set any sort of limit on the number of coupons being sold.

Now, had this been a glitch on Groupon's side, that would be completely different.

In fact, if you look at the small print of the offer it does say "subject to availability", so at any point if the photographer felt that take-up was too high he could have called a halt and said "no more available". He doesn't have to set a limit with Groupon; according to a recent consumer affairs program on UK TV it's not unusual for people to buy Groupon vouchers and have them declined by the business because of oversubscription.

Besides, this guy or we know nothing at all about his business idea. Why does everyone just suddenly think he's some kind of a retard? Oh right, this is the internet..

What if he has calculated that he can make a nice profit by selling them additional services? What if he has some students working for free and he is "outsourcing" the job to them, so that the students get experience and pass the class in school? What if..? You get the idea.

Yeah my guess is he's got to be hoping for upsells of some sort. Doing this much work for "free" is basically just getting his foot in the door, which may be more than he had before. Perhaps it will work out or perhaps it won't. Time will tell I suppose.

It could also be that "Captured Light" is a group of contracted photographers... their website doesn't list any photographers by name. 10 of them doing 1 month of work each over the course of a year isn't unheard of for promotion purposes. Also, they're probably sending out their juniors who are going underused. Photographers everywhere have been hurting as of late. They could batch up the retouching and printing (or ship that overseas), and reduce the overall cost of the promotion.

"It's possible that it's a group, though with copyright assignment only going to Tim Jones I tend to doubt it."

That is not uncommon. It makes it much easier than assigning copyrights to each photographer@group if you ever have to go to court. Court isn't only for people who try to reprint / copy / claim the work as their own, it is actually more common to have to take someone to court over non-payment for services rendered. I should know, I have a photography business I do as a side job. 9/10 clients are great, they pay on time, don't bitch about every tiny thing and don't try do weasel out of paying for services in any way they can. The last 1/10 is what the courts are for, at least as a last resort.

Maybe local business owners in your area can start maintaining a shared database or exchanged registry of problem customers especially the deadbeats who don't pay their bills. One business puts a customer on that list, you all refuse to do business with that person. What you would find is that the same individuals cause problems wherever they go. I'm tired of the way asshats never have any consequences. Aren't you?

Hmm, boycotting individual customers. I shall be glad to see how you hope to avoid having to sell everything you own to make a futile attempt to fight off the inevitable enormous compensation payment. Seriously, maintaining a sh*tlist (especially one which you distribute to someone else) is never a good idea, no matter how smart an idea it seems when you start.

He doesn't know what he's talking about. He thinks a CD and case will cost a pound (more like 20p in bulk I would think), and a photo frame £5 (again, I would guess about 1/10 to 1/5 of that in bulk). He also appears to be totally ignorant of the concept of the loss leader. All photography studios run apparently very cheap offers in the hope that customers will order very expensive prints, recommend them to their friends, book them for their wedding reception, commercial shoot, bah mitzvah etc. Ho

I have connections to the professional photography industry, in the form of a now-closed family business.

A comparable print package from a professional lab costs a few dollars. The blogger's estimates are on the high side in that regard alone. The basic airbrushing and editing is a somewhat common freebie from a lab, partly as a way of hiding processing defects (painting over dust spots on the paper). It gets even more disgustingly inaccurate when you factor in the cost of a minilab print [minilabhelp.com]. If the photograph

He's making a big assumption that the people buying these will buy nothing else from the photographer. It's highly likely that he will stiff them for extra prints/copies on DVD, and/or get a load of extra contracts out of it. I can see the photographer making good money out of this.

You're absolutely right, and he may just have been an idiot, but that's not necessarily the case. The only real surprise is that they take a full 50% - I would've guessed somewhere between 10% and 30%, and I'd find it hard to justify any reasonable offer when their cut is that high. Either way, though, this guy's story doesn't invalidate Groupon's premise entirely, and it might actually even strengthen the case for using them.

I've always assumed one of the advantages of Groupon (from a seller's perspective)

Indeed. And Groupon offers a no-questions-asked refund policy (at least in the US), so if the availability sucks, the buyer can get a full refund.

As far as the deal for the photographer, this is just an example of someone who didn't understand the business consequences of what they were doing when they did it. If the photographer had simply done £100 and required the shoot to be at this studio, he'd have done pretty well for himself. Or, he could have gone with the upsell model - offered a very bas

I also have some questions about the authors math. I dislike math and try to avoid it but his errors are so glaring they leaped out at me! He cites a £2.5 charge by the credit card companies if the customer pays via credit (TFA states that of the £14.50 the phtographer will get of the £29 if the customer pays with credit the photographer will only get £12.00.) Assuming Groupon makes the merchant eat the entire credit service fee (unlikely, more likely is the credit fee comes off

I've talked to a good 40 business owners who have used Groupon. Some things that the author of the article totally ignored:

1) Only about half of the Groupons get redeemed2) If redeemed after the expiration date, they are only good for the face value paid. I.e., if you buy a £200 Groupon for £29, and you don't redeem it before expiration, then you just get £29 off the price of whatever you buy.3) Upselling is key. For restaurants, when they sell a $40 Groupon for $20, they're betting you're going to come in with some friends and spend $60 to $100 on dinner. I do a lot of work in the recreational activity sector, and there they often do groupons for 50% off a basic package, then once you are there upsell you to a bigger package at full price. In the case of our photographer, if he does it right he'll be getting people to buy £400 or £600 photography packages - "You already are getting all this for £29, look what I can add to it for only £100 more!"

Now, maybe this groupon won't work out great for this one business, but Groupon can work very well if you set it up right and treat it as what it is supposed to be - an advertising/sales lead channel.

I realize slashdot is into the whole libertarian dog eat dog business thing, but it's really in Groupon's best interest to make sure this sort of thing doesn't happen, in particular when they're dealing with so many smaller businesses that might not have all that much expertise and probably aren't totally familiar with the business model. Yeah, the guy shouldn't have done the deal in the first place, but he didn't know what he was getting into and it looks really bad for Groupon to be running their own customers out of business (and it's a pretty terrible long term strategy)

Groupon doesn't care if their customers fail, new businesses are cropping up all the time. As P.T. Barnum said, there's a sucker born every minute. And Groupon gets 50% in the meantime, sounds like a sweetheart deal to me.

That's kind of the point. Companies are still figuring out if it's worth it or not. That's what the post is about. I've also heard that a lot of restaurants hope to make money because groupon customers will bring a friend or buy more than the coupon is worth. I've heard (through the planet money podcast) that customers just haven't been buying much over the coupon value, which makes it harder for restaurants. Again, it's an explorator

Yes it may be true however businesses don't understand how to use Groupon. It is supposed to be used for marketing/lead generation. In the past, businesses might have had to use newspaper, flyers, to distribute coupons to generate interest. Most of the time these coupons will lead to lower revenue but higher traffic. Groupon takes this a step further by generating revenue upfront. If the coupon is used, then this is no different than the previous method just more high tech. The main difference is that